Mondelez Is Stung by Coronavirus Lockdowns in Emerging Markets--Update
July 28 2020 - 6:13PM
Dow Jones News
By Annie Gasparro
Mondelez International Inc. said tough lockdowns to fight the
coronavirus in emerging markets hurt sales of its cookies and other
snacks in the second quarter.
Comparable sales for the maker of Oreo cookies, Toblerone
chocolate and Ritz crackers rose 11% in North America, but in Latin
America, where coronavirus cases have multiplied rapidly, sales by
that metric fell 11%. In its Asia, Middle East and Africa division,
where some countries have imposed stricter social distancing
regulations than in North America, comparable sales decreased 3%,
the company said Tuesday.
Mondelez Chief Executive Dirk Van de Put said the company's
emerging markets business improved in June and July as store
closures eased and more consumers were able to access its snacks.
"The majority of these markets are on better footing," he said.
Mondelez said it expects an increase in snacking in North
America to continue while sales in India, China and other emerging
markets return to growth, leading to stronger revenue in the second
half of the year. Still, executives cautioned that Latin American
demand lags and that the global business environment remains
volatile and susceptible to a second wave of coronavirus
lockdowns.
"We are now clearly talking about this change to our lives
continuing well into 2021," Mr. Van de Put said.
Food companies in the U.S. have been inundated with orders from
grocery stores since the pandemic exploded in March. In a country
where a lot of people are staying home and can afford to stock up
on food, the coronavirus has buoyed sales for the food
industry.
But Mondelez has benefited less than its U.S.-centric rivals
such as Campbell Soup Co. and Conagra Brands Inc.
Mondelez has also spent more to boost production to meet the
unprecedented demand in regions such as North America. The company
said Covid-19-related costs, higher prices for raw materials and
unfavorable exchange rates contributed to a lower profit margin in
the latest period.
Mondelez said it is removing 25% of the varieties to simplify
its supply chain and innovation process and reduce inventories. The
cost-saving move will also help meet higher demand for core
products such as Oreos.
In the latest quarter, Mondelez said it gained market share in
many segments, such as cookies in the U.S. and China, and chocolate
in India and the U.K.
Mr. Van de Put said he is spending more on brands to leverage
momentum gained during the pandemic. The company is also investing
in e-commerce, and figuring out how to best handle pricing and
sizes of snacks to weather the recession.
Mondelez's total revenue fell 2.5% from last year's second
quarter to $5.9 billion, in line with analysts' estimate, according
to FactSet. Adjusted profit of 63 cents a share marked a 16%
increase from the prior year excluding currency fluctuations and
topped analysts' projection of 56 cents a share.
Write to Annie Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
July 28, 2020 18:58 ET (22:58 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Mondelez (NASDAQ:MDLZ)
Historical Stock Chart
From Apr 2024 to May 2024
Mondelez (NASDAQ:MDLZ)
Historical Stock Chart
From May 2023 to May 2024